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The London stock market suffered a triple-digit fall at the open as news of problems at Silicon Valley Bank offset figures showing the UK economy grew by 0.3% January.

Official figures show the economy reversing a 0.5% fall in December and defying expectations that it would shrink.

The Office for National Statistics said the biggest contributions to growth in January came from a bounce back in many sectors including education, transport, entertainment and recreation.

The Bank of England and OECD had forecast that the UK will enter recession in 2023, but more recent forecasts suggest recession will be avoided.

At 8.05am the FTSE 100 was down 128 points 7,751.76.

Chancellor Jeremy Hunt said: “In the face of severe global challenges, the UK economy has proved more resilient than many expected, but there is a long way to go.

“Next week, I will set out the next stage of our plan to halve inflation, reduce debt and grow the economy – so we can improve living standards for everyone.’’

Rachel Reeves, Labour’s Shadow Chancellor, who will be in Glasgow today with party leader Sir Keir Starmer, said:  “Today’s results show our economy is still inching along this Tory path of managed decline.

“People will be asking themselves whether they feel better off under the Tories, and the answer will be no.

“But this is not a new trend. 13 years of Tory failure and wasted opportunities have left growth on the floor and our economy weakened.”

Ben Jones, CBI lead economist, said: “The slight rebound in growth at the start of the year wasn’t altogether surprising, given the sharp drop in December.

“But activity is likely to be subdued in the near-term, given the headwinds of high inflation, still-high energy prices and rising interest rates. However, sentiment is improving, and business leaders are hopeful of a more stable operating environment later this year. 

“The government should use the forthcoming budget to overcome the prevailing economic headwinds by tackling the barriers holding firms back.

“This includes solving labour shortages by reforming childcare and helping bring more working parents back into the workforce, as well as finding a replacement to the super deduction ahead of the planned six-point increase in corporation tax.”

7am: Robert Walters steps down

Robert Walters, chief executive of the eponymous recruitment agency, is retiring and will step down from the board at the AGM on 27 April.

He will be succeeded by long-serving executive Toby Fowlston who is CEO for the group’s global recruitment brands.

The company said profit before tax increased by 11% year-on-year to an all-time high of £55.6m (2021: £50.2m).

It said there had beeb a  softening of recruitment activity levels across many of the group’s markets. The Ukraine conflict, a high inflation and high interest rate environment, significant cutbacks across the global technology market and Covid-enforced lockdowns in Mainland China all had a cumulative effect on market confidence.

7am: FirstGroup

FirstGroup said it anticipates profits for the 2023 financial year to be ahead of previous expectations following strong trading in its bus and rail operations.

Graham Sutherland, chief executive, said the second half has been driven by increased passenger volumes and improved operational performance in bus and stronger than anticipated demand for its open access operations in rail.

“We remain committed to working closely with our partners to deliver successful bus and rail networks that serve the needs of our customers and communities and to playing a central role in achieving many of society’s economic, social and environmental aims.”

Global markets

Stock markets were expecting another fall today ahead of US non-farm payrolls figures and a weak session on Wall Street.

The Dow Jones Industrial Average closed 1.7% lower, the Nasdaq Composite dropped 2.1% and the S&P 500 declined 1.8%.

The S&P financial sector fell about 4%, its worst day since June 2020.

Asian markets were also weaker. The Nikkei 225 index in Tokyo closed down 1.7%, after the Bank of Japan left its ultra-easy monetary policy unchanged. In China, the Shanghai Composite was down 1.1%, while the Hang Seng index in Hong Kong was down 2.5%.